Intel slashes chip prices, boosting pressure on AMD

Intel is slashing the price of some of its processors up to 50 percent, a slap in the face to rival Advanced Micro Devices, long known as the low-price alternative in the chip market.

Intel announced on its Web site Sunday that it had cut the price of about a dozen processors. Patrick Ward, a spokesman for Intel, noted that most of the processors on the price cut list were built on 65 nanometer (nm) technology, which is being phased out in favor of its new 45nm chips. It's akin to car dealers cutting the prices on last year's models to make room for the new ones.

"We're transitioning from 65nm to 45nm," said Ward. "We're in the process of refreshing our line. If you see a 65nm [chip], it's older technology and we're moving on from it."

According to Intel's new price list, its Core 2 Quad Processor Q6700 went from US$530 to $266 for a shipment of 1,000 chips -- a 50 percent change. The Intel Xeon X3230 also had its price slashed in half, going from US$530 to $266.

The company also noted that the price of 1,000 Core 2 Duo E6850 chips was cut from US$266 to $183, a 31 percent drop, while the Intel Celeron 430 dipped 23 percent to US$34. And the price of a Intel Xeon 3085 shipment was cut from US$266 to $188.

Dan Olds, an analyst with Gabriel Consulting Group, said it's fairly common for Intel to trim some chip prices, but he's surprised they'd make such big cuts on so many chips at once.

"This really keeps up the pressure on AMD," he added. "Intel blankets the market from high-end to low-end, with multiple choices at almost every price point -- each competitive with AMD on either performance or price or both. They're making sure they have a compelling price and/or performance value proposition in every segment where they compete with AMD. In short, it isn't getting any easier to compete with Intel.

AMD said last week that it's on track to ship its first 45nm chips in volume in the fourth quarter of this year. If that is when AMD enters the 45nm race, the company will be about a year behind Intel, which shipped its first 45nm Penryn chip this past November.

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